Green energy policies sting consumers: King

Origin Energy
managing director
Grant King
has singled out green energy policies as the key driver of future increases in household utility bills.

Speaking at an Association of Australian Stockbrokers conference in Sydney on Friday, Mr King said that the “green part" of a typical electricity bill had risen from about 2 per cent to about 15 per cent over the past five years.

“Solar has, in my view, had a terrible impact on consumers and has been over-stimulated by feed-in tariffs," he said.

Increased network costs in the delivery of electricity to homes has been the biggest contributor to rising power bills and now stands at half of the average total cost. Solar energy users have not been paying their share of those costs.

Origin Energy’s Grant King has said that the “green part” of a typical electricity bill rose from about 2 per cent to about 15 per cent over the last five years and is set to rise to 30 per cent.
Photo: Glenn Hunt

‘Solar users free-riding’

“We’ll have to change the way we subsidise solar," Mr King said. “Solar users have been free-riding on the network".

A recent QCA report in Queensland estimated that customers were paying an average subsidy of about $200, or 17 per cent of a typical power bill.

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The green component of small and medium enterprise energy bills is closer to 30 per cent.

‘Increasingly disadvantageous’

Mr King, who has led Origin since it was spun out of Boral more than a decade ago, also identified the Renewable Energy Target (RET) scheme and the carbon price as green policies that would push up power bills for consumers.

Future energy price rises are not expected to be as rapid as in the previous five years. But Mr King said they would be dependent on the election, in a veiled reference to the Gillard government’s RET and carbon price policies.

“The global consensus that existed in for this policy four or five years ago is no longer there and that makes Australia’s carbon policies increasingly disadvantageous to Australia," he said.

The onset of the shale boom in the US has delivered a glut of cheap gas that has revived the US manufacturing sector and dramatically reduced greenhouse gas emissions.

Shale cuts emissions

The substitution of gas for coal in power generation has weighed on thermal coal prices and has reduced America’s carbon emissions by about 500 million tonnes a year. Australia’s annual carbon emissions are about 550 million tonnes.

“The US will meet its Kyoto targets for the reduction of greenhouse gas emissions and it’s been achieved without carbon trading systems and carbon pricing and without a uniform regulatory approach to renewable energy," Mr King said.

In an interview with the Australian Financial Review, Mr King said he could not understand why people with environmental concerns would be so opposed to the thing – unconventional gas – which has the most beneficial impact on the reduction of greenhouse gas emissions.

“There’s a group of people who are genuinely concerned about what the production of CSG [coal seam gas] means in terms of the impact on the environment and on communities and land owners," he said. “The industry can answer all of those questions, in I believe, very satisfactory ways.

‘Not interested’

“[But] there’s clearly a group of people for whom when we seek to address their concerns, they are not interested in the answer".

The US manufacturing revival sparked by the advent of cheap unconventional gas has prompted some parts of the Australian business community like
James Fazzino
, the boss of fertiliser and explosives maker
Incitec Pivot
, to call for federally mandated gas reservation.

Mr King said strong prices were needed to attract the investment needed to get the gas to market in the first place.

“Those resources need the sorts of prices that we’re seeing in the export market, that is, what they are worth overseas," he said.

O’Farrell under fire

“Therefore there isn’t cheap gas to be had. You can’t reserve something that doesn’t exist, which is cheap gas."

The need to bring more gas online calls anti-CSG legislation like that adopted by NSW premier
Barry O’Farrell
into question.

“In the context of growing supply it would be mad to prevent gas from being developed," Mr King told the Financial Review. “That solves nothing and it achieves nothing. We do need to increase supply."